Wednesday, January 19, 2011

Bank of America (NYSE:BAC) Survey Shows Fund Managers Bullish on Equities

The monthly survey of Bank of America (NYSE:BAC) of fund managers found them bullish on the global equities markets, as the unbridled optimism continues to pour out, possibly setting many up for a huge pull back.

According to the survey responses, "Risk appetite is strong (risk composite 46 vs. a long term avg 40) but contained with average cash holdings rising slightly to 3.7% and hedge funds reigning back equity exposure."

It also noted, "This month we saw a further surge in allocation to the US and a sharp improvement in the stance on Japan to a net positive reading."

Fund managers said they're 27 percent overweight in the U.S. and 5 percent in Japan.

Bank of America concluded, "The level of equity enthusiasm and relatively low cash levels signal some concern but there is to us little evidence of over-exuberance in the survey. The risk to a bullish consensus is if US growth expectations are derailed by either weaker data or tighter policy. This suggests time for portfolio protection & diversification rather than out and out selling."

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